Macdonald denies lying about Obeid land

Eddie Obeid Jnr admitted he directed a lawyer to draft a letter to conceal the family's interests.Source: AAP

FORMER NSW minister Ian Macdonald has been labelled a liar at a corruption inquiry, after he said a coal mining tenement was created "by chance" over land owned by the Obeid family.

The Independent Commission Against Corruption (ICAC) is investigating whether Mr Macdonald, 63, rorted a coal mining tender process in the NSW Upper Hunter's Bylong Valley in 2008, and how his former Labor colleague Eddie Obeid and his family may have gained from it.

The ICAC alleges Mr Macdonald gave the Obeids inside knowledge that allowed the family to profit, potentially by $100 million.

It has also been alleged that Mr Macdonald stood to make millions in kickbacks.

Giving evidence on Monday, Mr Macdonald said it was just by chance that the Mt Penny mining tenement was created over land owned by the Obeids.

"Did it just happen by chance?" Commissioner David Ipp asked.

"Well, it has to be by chance," Mr Macdonald replied.

Mr Macdonald rejected a suggestion from counsel assisting the commission, Geoffrey Watson SC, that the tenement was created "in mind to profit your friends the Obeids".

"Do you accept that?" Mr Watson asked.

"I don't accept that," Mr Macdonald replied.

He said he was unaware the Obeids had interest in land over the critical tenement at the time it was created in 2008.

"It had nothing to do with me, I had no idea they were doing that," he told the inquiry.

After being told to "focus" by Mr Watson, Mr Macdonald said he got the idea to create the tenement over the Mt Penny area from an atlas in his office.

"I got it from an atlas that I used regularly in my office," Mr Macdonald said.

"Mt Penny is the first feature northwest of Bylong on that map."

Mr Watson retorted: "I'm suggesting you're a liar".

Soon afterwards, Mr Macdonald conceded he no longer had the atlas, and had not secured a copy of it.

The inquiry heard that in May 2008 Mr Macdonald had a conversation with Moses Obeid about an Obeid property in the Bylong valley, and the nearby Anglo American tenement.

On May 9, 2008, an email was sent from Mr Macdonald's office to the Department of Primary Industries seeking advice on coal reserves in the Mt Penny area, the inquiry was told.

Mr Macdonald said Mt Penny was just one of numerous coal areas in NSW he asked the department for information about.

He said the decision was made to open the area up to coal mining because it was a "terrific seam" not covered by other exploration licences.

Earlier, Ian Macdonald's former chief of staff, Tony Hewson, said he might have urged the former Labor minister to reopen the tender process for coal exploration licences on behalf of mining company White Energy.

The inquiry was told Mr Macdonald telephoned Mr Hewson 145 times in 2008, and that the pair were close friends.

It was told Mr Hewson had been paid up to $740,000 by mining companies to lobby Mr Macdonald.

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